Discuss about the Globalisation and the World Economy.
It is said that globalisation has provided support to both good and evil but it is important to note that it has potential to alleviate global poverty. The concept of globalisation has been researched upon for a long time and hence it has been defined in different ways by number of scholars. The classical definition of globalisation could be placed as the increasing integration of the economies across the globe (Hay & Marsh, 2016). Globalisation has largely contributed to the ease of access to different things all across the world which has developed the business among countries without any troubles. A clear political intention played a large part in developing cross country business. One of the major causes of globalisation in the world is the dramatic reduction in the duration and costs of transportation which has facilitated the process business across countries. The present study discusses the different aspects of globalisation and its impact on global economy (Cavusgil et al 2014).
Cross border trade has been continuously increasing since the thirteenth century which has developed a growing need of developing effective communication all across the transportation which will help in developing the business for different countries as well as organisations. As the trade started growing all across the world, economic transaction saw a conspicuous incline which slowly and steadily boosted the world economy. With gradual development in global trade world economic growth became evident (Hay & Marsh, 2016). It was a clear wrong thought that globalisation continues to affect the poor, as found in different researches the number of people living on just $1 has reduced radically in the last 100 years and globalisation has exposed them to the world’s culture that has helped them to work and increase their income which was not possible without this drastic change in the world’s culture (Knox et al 2014). In the last few decades inequality has reduced even in population and increased global trades have developed business relations as well as political relations. For instance in the last few years top powers of world economy china, US, India, Russia all have gotten into significant trade relations that has helped to contribute towards the development of the regional as well as international economy. Even though globalisation has been a significant part of the economic development of the globe but there have been certain issues which are contradictory to the movement of the world towards globalisation (Hirst et al 2015). These are common notions which will be addressed through this study:
In case of business globalisation a business organisation has to analyse several of significant and relevant factors for assessing the risk factors within a nation before entering into the domestic markets of that nation. For example, the political factor is one of the most significant factors for a business organisation to determine the risk factors within a nation before expanding its international trading operations in that nation (Herkenrath & Bornschier, 2015). There are several of significant organisational aspects related to the political environment of a nation which should be analysed by any international business before selecting that nation as its market place, such as stability of political environment, frequency industrial policy changes, domestic legislations for industrial activities, monetary and fiscal policies and so on (Cavusgil et al 2014). The cultural factor is also a significant factor to be analysed by a business organisation before developing its international market in any specific nation. The product and service needs among the majority people within a nation are majorly dependent on their cultural life and habits. Hence it is important for a business to evaluate the suitability of its consumer offerings (either products or services) with the cultural habits and life of people within a nation so that proper international markets could be selected where adequate growth and potential customers could be achieved (Hirst et al 2015).
The economic factor is also a very significant factor to be analysed by a business organisation before selecting any nation as its international market place. The economic state of a nation gives a clear idea to business organisations about possibilities for market economy growth opportunities and it also gives clear indication about the disposable income of majority people within the nation as well (McMichael, 2015). Hence, it is essential for a business organisation for selecting the most appropriate market places in the most potential nations where the economic growth is in the favour of industrial growth and prosperity and majority people are economically able to afford the consumer offerings (Herkenrath & Bornschier, 2015). Moreover, every different nation across the world has some distinct consumer protection laws and employment acts which has to be maintained by all domestic and international business organisations operating within the nation. Hence, ethical factor should also be considered by a business while choosing a nation as its international market place so that the relevant code of conducts could be complied with the local policies and legislations (Hay and Marsh, 2016).
There are several of benefits and implications associated with international trading in business organisations. Globalisation could provide a business with several of beneficial advantages, such as
Even after having so many benefits international trading also has several of implications for business organisations as well. Some of the most significant problems of international trading to business organisations are mentioned below,
There is wider range of methods which are utilised by business organisations for penetrating in international markets. One of the most important and widely followed methods in this regard is PESTLE analysis. A PESTLE analysis enables a business organisation to analyse some of the most significant macro environmental factors which are necessary for analysing the growth and risk factors in the markets of specific nations for business internationalisation (Hite & Chorev, 2014). The macro environmental factors which could be analysed depending on a PESTLE analysis method are political, economical, social, technological, legal and environmental factors and there is no doubt that all these factors are important to be analysed for the assessment of growth opportunities and risk factors in international markets (Herkenrath & Bornschier, 2015). Another significant method which is utilised by business organisations for penetrating in newer international markets is a SWOT analysis. A SWOT analysis is helpful for a business organisation to realise its strengths and weaknesses to penetrate in a certain international market and this analysis also shed light on the threats and growth opportunities existing in the market so that the most appropriate and potential market penetration strategy could be chosen by a business organisation (McMichael, 2015).
In case of business globalisation global production needs is a significant need for business organisations to meet the product and service demands across its international business territory. It is too expensive for a business to export produced products from its domestic production locations all of its international business locations (Dunning, 2014). Hence global production is the only solution left for business organisations but in case of global production the operation management is a more complex process due to the requirement of international suppliers, production infrastructure and adequate manpower in every international business location. Business outsourcing and international logistics management are also complex parts associated with business globalisation as both the processes are highly capital consuming (Hirst et al 2015). Marketing is also a significant issues associated with business globalisation due to the need of extensive marketing and promotional activities for creating a better brand awareness in international markets. Even human resource management is also a significant issue in case of business globalisation due to diverse work culture of people across the world and diversity of employment policies in different nations across the world as well (Matten, 2015).
Conclusion
Hence it could be concluded from the above study that globalisation has transformed the world radically. From the economic point of view it could be said that with globalisation the market has become much more opened which has helped the different businesses to break the shackles of distance and work across borders that has not only contributed to the overall development of the organisations but it has also boosted the economy of the countries across the world. It is important to mention that globalisation has helped businesses all across the world to connect to the consumers effectively and this has clearly boosted the world economy (Cavusgil et al 2014).
References
Hay, C. and Marsh, D. eds., 2016. Demystifying globalization. Springer.
Knox, P., Agnew, J.A. and McCarthy, L., 2014. The geography of the world economy. Routledge.
Michie, J. ed., 2011. The handbook of globalisation. Edward Elgar Publishing.
Knox, P., Agnew, J. A., & McCarthy, L. (2014). The geography of the world economy. Routledge.
Ciccantell, P. S., & Bunker, S. (2015). International inequality in the age of globalization: Japanese economic ascent and the restructuring of the capitalist world-economy. journal of world-systems research, 8(1), 62-98.
Desai, R. (2013). Geopolitical Economy: After US Hegemony, Globalization and Empire (The Future of World Capitalism). Pluto Press.
Hite, A. B., & Chorev, N. (2014). The globalization and development reader: Perspectives on development and global change. John Wiley & Sons.
Herkenrath, M., & Bornschier, V. (2015). Transnational Corporations in World Development Still the Same Harmful Effects in an Increasingly Globalized World Economy?. Journal of world-systems research, 9(1), 105-139.
McMichael, P. (2015). World-systems analysis, globalization, and incorporated comparison. journal of world-systems research, 6(3), 668-689.
Dunning, J. H. (2014). The Globalization of Business (Routledge Revivals): The Challenge of the 1990s. Routledge.
Hirst, P., Thompson, G., & Bromley, S. (2015). Globalization in question. John Wiley & Sons.
Matten, D. (2015). Business Ethics: Managing Corporate Citizenship and Sustainability in the Age of Globalization. Oxford University Press.
Cavusgil, S. T., Knight, G., Riesenberger, J. R., Rammal, H. G., & Rose, E. L. (2014). International business. Pearson Australia.
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